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VAT (Value Added Tax)

 

HIGH COURT OF PUNJAB AND HARYANA - Nand Kishore & Company Versus The State of Punjab Date of decision: 13.8.2008

we have no hesitation in striking down notification No. S.O. 53/P.A. 8/2005/S.8/2007 dated 5.11.2007 adding entry 152 in Schedule `B' to the VAT Act, whereby tax is sought to be levied on sale of sugar imported from outside the State of Punjab. As a necessary consequence and to correct the mischief created with the issuance of notification No. S. O. 52/P.A. 8/2005/S.8/2007 dated 5.11.2007 (Annexure P.1), we further hold that the words “manufactured in the State of Punjab” used in entry 49 in Schedule `A' as substituted vide notification (Annexure P.1) to be violative of Articles 301 and 304(a) of the Constitution of India, as the same creates discrimination in the levy of tax on the sale of sugar brought from outside the State as against manufactured within the State of Punjab.

 

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
C.W.P. No. 46 of 2008 Date of decision: 13.8.2008

Nand Kishore & Company, Railway Road, Khanna. .. Petitioner Versus The State of Punjab and another. .. Respondents


CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA

HON'BLE MR. JUSTICE RAJESH BINDAL

Present: Mr. K. L. Goyal and Mr. Sandeep Goyal, Advocates for the petitioners.

Mr. P. K. Jain, Additional Advocate General, Punjab for the respondents.
..

Rajesh Bindal J.

1. This order will dispose of the bunch of 37 writ petitions bearing Nos. 46, 53, 54, 55, 59, 67, 68, 69, 70, 85, 88, 124, 125, 126, 127, 128, 135, 139, 140, 142, 146, 153, 155, 159, 160, 161, 165, 184, 215, 219, 220, 555, 602, 603, 1130, 1457 and 1458 of 2008.

2. The facts are extracted from C.W.P. No. 46 of 2008.

3. The challenge in the bunch of petitions is to notification No. S.O.52/P.A. 8/2005/S.8/2007 dated 5.11.2007 (Annexure P.1), issued by the Department of Excise and Taxation, Punjab carrying out amendment in Schedule `A', whereby entry “49” has been substituted and notification No. S.O.53/P.A. 8/2005/S.8/2007 dated 5.11.2007 (Annexure P.2), whereby new
entry “152” has been added in Schedule `B' to the Punjab Value Added Tax Act, 2005 (for short, `the VAT Act').

4. Briefly, the facts are that the petitioner is a proprietary concern carrying on the business of purchase and sale of sugar and allied goods. He is registered under the provisions of the VAT Act. The controversy giving rise to the cause of action to the petitioner to file the present petition arose with the issuance of the impugned notification by the respondents on 5.11.2007, whereby entry 49 in Schedule `A' was substituted and new entry 152 in Schedule `B' was added. In some and substance, the effect of the entries was that the sugar which was imported from outside the State of Punjab except levy sugar was leviable to tax under the Act, whereas the sugar manufactured in the State of Punjab was exempted from taxation.

5. Learned counsel for the petitioner submitted that Article 301 of the Constitution provides that trade, commerce and intercourse throughout the territory of India shall be free. It is only the Parliament which has been authorised in law to impose restrictions on the freedom of trade, commerce or intercourse between one State and another, as may be required in public interest, in terms of Article 302 of the Constitution of India. Article 303 of the Constitution provides that neither the Parliament nor the Legislature of a State shall have any power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or
authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. Notwithstanding anything contained in Articles 301 or 303 of the Constitution of India, the State Legislature is authorised to impose on goods imported from other State or the Union Territory any tax to which similar goods manufactured or produced in that State are subject. However, there cannot be any discrimination regarding taxation between the goods so imported and goods so manufactured or so produced. The submission is that effect of impugned notifications is that tax at the rate of 4% has been levied only on the sugar imported from outside the State of Punjab, whereas the sugar which is manufactured in the State of Punjab is not subjected to any tax, as the same has been put in Schedule `A' containing tax free goods. Concluding the arguments, learned counsel submitted that the impugned notifications are clearly violative of the
constitutional mandate contained in Part XIII of the Constitution of India and are liable to be set aside. Reliance has been placed upon Firm A. T. B. Mehtab Majid and Co. v. State of Madras and another, AIR 1963 SC 928; State of Madhya Pradesh another v. Bhailal Bhai and others, AIR 1964 SC 1006; A. Hajee Abdul Shukoor and Co. v. The State of Madras, AIR 1964 SC 1729; West Bengal Hosiery Association and others v. State of Bihar and another, AIR 1988 SC 1814; Weston Electronics and another v. State of Gujarat and another, AIR 1988 SC 2038; State of Uttar Pradesh and another v. M/s Laxmi Paper Mart and others, AIR 1997 SC 950 and Shree Mahavir Oil Mills and another v. State of Jammu and Kashmir and others, (1997) 104 STC 148.

6. Defending the impugned notifications issued by the State,
learned Additional Advocate General submitted that the impugned
notifications are in no way unreasonable or illegal. The discrimination in

taxation on the imported sugar, as is sought to be pointed out by the
petitioner, is not there as in the case of sugar manufactured in the State of
Punjab, the sugarcane used in the manufacture thereof is already taxed. As
the State of Punjab gets tax on the sugarcane, the sugar was made tax free,
whereas in the case of imported sugar, the State would get tax on the sale of
sugar in the State. The action on the part of the State will not hamper free
flow of trade and commerce at the boundaries of the State or at any other
points inside the State and is not hit by Article 301 of the Constitution of
India. It is further submitted that a similar tax has been levied under the
Punjab Tax on Entry of Goods into Local Areas Act, 2000 (for short, `the
Entry Tax Act') vide notification dated 15.11.2007 and as the petitioner is
not aggrieved against the notification issued under the Entry Tax Act, it
cannot possibly have any grievance against the notifications issued under
the VAT Act.

7. In response to the contention of learned counsel for the State
regarding non-challenge to the notification issued under the Entry Tax Act,
learned counsel for the petitioner submitted that Entry Tax Act itself is
under challenge in a number of petitions filed by various parties before this
Court and in any case, non-challenge to a notification under a different
statute cannot be considered as a bar on the right of the petitioner to
challenge a notification issued under the VAT Act.

8. Heard learned counsel for the parties and perused the paper
book.

9. To appreciate the contentions raised by learned counsel for the
parties, it would be necessary to extract relevant provisions of the
Constitution of India and also the VAT Act. The same are extracted below:
“ Articles 301 and 304 of the Constitution of India
301. Freedom of trade, commerce and intercourse.- Subject
to the other provisions of this Part, trade, commerce and
intercourse throughout the territory of India shall be free.
.... ..... ......
304. Restrictions on trade, commerce and intercourse
among States.- Notwithstanding anything in Article 301 or
Article, 303, the Legislature of a State may by law

(a) impose on goods imported from other States (or the
Union Territories) any tax to which similar goods
manufactured or produced in that State are subject, so,
however, as not to discriminate between goods so
imported and goods so manufactured or produced; and

(b) impose such reasonable restrictions on the freeom of
trade, commerce or intercourse with or within that State
as may be required in the public interest:
Provided that no Bill or amendment for the purposes of clause
(b) shall be introduced or moved in the Legislature of a State
without the previous sanction of the President.
..... ..... ......
Section 16 of the VAT Act
16. Tax-free Goods
No tax shall be payable on the sale of goods specified in
Schedule A and no person including a taxable person or a
registered person shall charge tax on the sale of goods which
are declared tax-free goods under this section.”

10. The entry in Schedule `A', as existing upto 5.11.2007, is
reproduced below:
“ SCHEDULE `A'
(upto 5.11.2007)
S.No. Name of Commodities
49 Sugar and Khandsari”

11. After the amendment, vide notification dated 5.11.2007, entry
49 in Schedule `A' is reproduced below:
“ SCHEDULE `A'
S. No. Name of Commodities
49 Sugar manufactured in the State of Punjab,
levy sugar and Khandsari.”

12. On the same date, entry 152 was added in Schedule `B'
providing for levy of tax at the rate of 4%, which is as under:
“ SCHEDULE `B'
S. No. Name of Commodities

152 Sugar imported from outside the State of
Punjab except levy sugar.”

13. Article 301 of the Constitution of India provides that trade,
commerce and intercourse throughout India shall be free. However, the
same is subject to other provisions of Part XIII of the Constitution of India.
Hon'ble the Supreme Court considered the import of Article 301 of the
Constitution of India in a Constitution Bench judgment in Atiabari Tea Co.
Ltd. v. State of Assam, AIR 1961 SC 232 and in Automobile Transport
(Rajasthan) Ltd. v. State of Rajasthan, AIR 1962 SC 1406. In Atiabari Tea
Co. Ltd.'s case (supra), Hon'ble the Supreme Court opined as under:
“....Thus considered we think it would be reasonable and
proper to hold that restrictions freedom from which is
guaranteed by Art. 301, would be such restrictions as directly
and immediately restrict or impede the free flow or movement
of trade. Taxes may and do amount to restrictions; but it is only
such taxes as directly and immediately restrict trade that would
fall within the purview of Art. 301......... We are therefore
satisfied that in determining the limits of the width and
amplitude of the freedom guaranteed by Art.301 a rational and
workable test to apply would be:” Does the impugned
restriction operates directly or immediately on trade or its
movement?.......
......Our conclusion therefore is that when Art. 301 provides
that trade shall be free throughout the territory of India it
means that the flow of trade shall run smooth and unhampered
by any restriction either at the boundaries of the States or at any
other points inside the States themselves. It is the free
movement or the transport of goods from one part of the
country to the other that is intended to be saved, and if any Act
imposes any direct restrictions on the very movement of such
goods it attracts the provisions of Art. 301, and its validity can
be sustained only if it satisfies the requirements of Art. 302 or
Art. 304 of Part XIII....”

14. Considering an issue where Rule 16 of the Madras General

Sales Tax (Turnover and Assessment) Rules, 1939 providing for levy of
discriminatory tax on tanned hides or skins imported from outside the State
as against those manufactured within the State, a Constitution Bench of
Hon'ble the Supreme Court in Firm A. T. B. Mehtab Majid and Co.'s case
(supra) opined as under:
“It is therefore now well settled that taxing laws can be
restrictions on trade, commerce and intercourse, if they hamper
the flow of trade and if they are not what can be termed to be
compensatory taxes or regulatory measures. Sales tax, of the
kind under consideration here, cannot be said to be a measure
regulating any trade or a compensatory tax levied for the use of
trading facilities. Sales tax, which has the effect of
discriminating between goods of one State and goods of
another, may affect the free flow of trade and it will then offend
against Art. 301 and will be valid only if it comes within the
terms of Art. 304(a).
Article 304(a) enables the Legislature of a State to make laws
affecting trade, commerce and intercourse. It enables the
imposition of taxes on goods from other States if similar goods
in the State are subjected to similar taxes, so as not to
discriminate between the goods manufactured or produced in
that State and the goods which are imported from other States.
This means that if the effect of the sales-tax on tanned hides or
skins imported from outside is that the latter becomes subject to
a higher tax by the application of the proviso to sub-r. (2) of R.
16 of the Rules, then the tax is discriminatory and
unconstitutional and must be struck down.
We do not agree with the contentions for the respondents. The
contention that Art. 304(a) is attracted only when the impost is
at the border, i.e., when the goods enter the State on crossing
the border of the State, is not sound. Art. 304(a) allows the
Legislature of a State to impose taxes on goods imported from
other States and does not support the contention that the
imposition must be at the point of entry only.

.... .... ....
It is urged for the respondent State that to consider
discrimination between the imported goods and goods
produced or manufactured in the State, circumstances and
situations at the taxable point must be similar and that the
circumstance of hides or skins tanned within the State and on
which tax had been paid earlier at the time of their purchase in
the raw condition is sufficient to consider such hides or skins to
be different from the hides or skins which had been tanned
outside the State. We do not consider that the mere
circumstance of a tax having been paid on the sale of such
hides or skins in their raw condition justifies their forming
goods of a different kind from the tanned hides or skins which
had been imported from outside. At the time of sale of those
hides or skins in the tanned state, there was no difference
between them as goods and the hides or skins tanned outside
the State as goods. The similarity contemplated by Art. 304(a)
is in the nature of the quality and kind of the goods and not
with respect to whether they were subject of a tax already or
not.
We are therefore of opinion that the provisions of R. 16(2)
discriminate against the imported hides or skins which had
been purchased or tanned outside the State and that therefore
they contravene the provisions of Art. 304(a) of the
Constitution.”

15. Another Constitution Bench of Hon'ble the Supreme Court in
State of Madhya Pradesh and another v. Bhailal Bhai (supra) considered the
issue, whereby discriminatory tax was imposed on tobacoo imported from
outside the State as against the tobacoo grown within the State. Relevant
paragraph thereof is extracted below:
“There can therefore be no escape from the conclusion that
similar goods manufactured or produced in the State of
Madhya Bharat have not been subjected to the tax which
tobacco leaves, manufactured tobacco and tobacco used for

Bidi manufacturing, imported from other States have to pay on
sale by the importer. This tax is therefore not within the saving
provisions of Art. 304(a). As already pointed out it contravenes
the provisions of Art. 301 of the Constitution. The tax, has
therefore been rightly held by the High Court to be invalid. It is
clear that the assessment of tax under these notifications was
thus invalid in law.”

16. To the similar effect is another Constitution Bench judgment in
A. Hajee Abdul Shukoor and Co.'s case (supra).

17. In Weston Electronics and another v. State of Gujarat and
another (supra), again the issue for consideration before Hon'ble the
Supreme Court was regarding levy of discriminatory tax on electronic
goods which were imported from outside the State as against the goods
manufactured within the State. The discriminatory tax was sought to be
defended by the State on the plea that the same was meant to provide
incentive for encouraging local manufacturing unit. However, such a plea
was not accepted by Hon'ble the Supreme Court. While accepting the plea
set up by the appellant before the Supreme Court, the notification providing
for lower rate of tax on the sale of goods manufactured within the State was
struck down.

18. In The Indian Cement v. State of Andhra Pradesh, AIR 1988
SC 567, Hon'ble the Supreme Court observed as under:
“Variation of the rate of inter-State sales tax does affect free
trade and commerce and creates a local preference which is
contrary to the scheme of Part XIII of the Constitution.”

19. The issue again came up for consideration before Hon'ble the
Supreme Court in West Bengal Hosiery Association's case (supra), where
the goods manufactured outside the State of Bihar and sold in the State of
Bihar were subjected to levy of sales tax at the rate of 5%, whereas the sale
of similar goods manufactured in the State of Bihar were exempted from
tax. Considering the law on the subject, Hon'ble the Supreme Court opined
that from a commercial or normal point of view, such a discriminatory levy
of sale tax is bound to affect free flow of hosiery goods from outside States
into the State of Bihar and would, therefore, amount to hampering the free

flow of trade and commerce, hence, violative of Article 301 of the
Constitution of India.

20. In Shree Mahavir Oil Mills' case (supra), Hon'ble the Supreme
Court, considering a similar issue, opined that though clause (a) of Article
304 of the Constitution of India is worded in a positive language but has a
negative aspect. It is, in truth, a provision prohibiting discrimination against
the imported goods. It provides that levy of tax on both imported as well as
locally manufactured goods ought to be at the same rate so that artificial
fiscal barriers are not created. Relevant passage therefrom is extracted
below:
“....Article 304 contains two clauses. Clause (a) states that “the
Legislature of a State may by law -(a) impose on goods
imported from other States or the Union territories any tax to
which similar goods manufactured or produced in that State are
subject, so, however, as not to discriminate between goods so
imported and goods so manufactured or produced”. The
wording of this clause is of crucial significance. The first half
of the clause would make it appear at first flush that it merely
states the obvious: one may indeed say that the power to levy
tax on goods imported from other States or Union territories
flows from article 246 read with Lists II and III in the Seventh
Schedule and not from this clause. That is of course so, but
then there is a meaning and a very significant principle
underlying the clause, if one reads it in its entirety. The idea
was not really to empower the State Legislatures to levy tax on
goods imported from other States and Union territories-that
they are already empowered by other provisions in the
Constitution- but to declare that that power shall not be so
exercised as to discriminate against the imported goods vis-avis
locally manufactured goods. The clause, though worded in
positive language has a negative aspect. It is, in truth, a
provision prohibiting discrimination against the imported
goods. In the matter of levy of tax- and this is important to bear
in mind- the clause tells the State Legislatures- “tax you may

the goods imported from other States/Union Territories but do
not, in that process, discriminate against them vis-a-vis goods
manufactured locally”. In short, the clause says: levy of tax on
both ought to be at the same rate. This was and is a ringing
declaration against the States creating what may be called “tax
barriers” -or “fiscal barriers”, as they may be called- at or along
their boundaries in the interest of freedom of trade, commerce
and intercourse throughout the territory of India, guaranteed by
article 301. As we shall presently point out, this clause does not
prevent in any manner the States from encouraging or
promoting the local industries in such manner as they think fit
so long as they do not use the weapon of taxation to
discriminate against the imported goods vis-a-vis the locally
manufactured goods. To repeat, the clause bars the States from
creating tax barriers- or fiscal barriers, as they can be calledaround
themselves and/or insulate themselves from the
remaining territories of India by erecting such “tariff walls”.
Part XIII is premised upon the assumption that so long as a
State taxes its residents and the residents of other States
uniformly, there is no infringement of the freedom guaranteed
by article 301; no State would tax its people at a higher level
merely with a view to tax the people of other States at that
level. And it is this clause which has a crucial bearing on this
case........ The freedom guaranteed, it is worthy of notice, is
“throughout the territory of India” and not merely between the
States as such; the emphasis is upon the oneness of the territory
of India. Part XIII starts with this concept of oneness but then it
provides exceptions to that rule, as stated above, to meet certain
emerging situations. As a matter of fact, it can well be said that
clause (a) of article 304 is not really an exception to article 301,
notwithstanding the non obstante clause in article 304 and that
it is but a re-statement of a facet of the very free freedom
guaranteed by article 301, viz., power of taxation by the
States.”

21. Summing up the enunciation of law on the subject, in the above
referred case, Hon'ble the Supreme Court while declaring the impugned
notification to be violative of the provisions of Articles 301 and 304-A of
the Constitution of India, directed that the appellant therein shall not be
entitled to claim any refund of the amount already paid.

22. In State of Uttar Pradesh and another v. M/s Laxmi Paper Mart
and others (supra), Hon'ble the Supreme Court, while following its earlier
judgment in Firm A. T. M. Mehtab Majid and Co.'s case (supra), struck
down levy of discriminatory tax on the exercise books prepared from the
paper purchased within the State and exercise books imported from outside
the State.

23. In a recent decision, a Constitution Bench of Hon'ble the
Supreme Court in Jindal Stainless Ltd. (2) and another v. State of Haryana
and others, (2006) 7 SCC 241, while considering the concept of
“compensatory tax” vis-a-vis Part XIII of the Constitution of India,
examined the scope of Articles 301, 302 and 304 of the Constitution of
India. The relevant paragraphs thereof are extracted below:
“Article 301 states that subject to the other provisions of Part
XIII, trade, commerce and intercourse throughout India shall be
free. It is not freedom from all laws but freedom from such laws
which restrict or affect activities of trade and commerce
amongst the States. Although Article 301 is positively worded,
in effect, it is negative as freedom correspondingly creates
general limitation on all legislative power to ensure that trade,
commerce and intercourse throughout India shall be free.
Article 301, therefore, refers to freedom from laws which go
beyond regulations which burdens, restricts or prevents the
trade movement between States and also within the State. Since
“freedom” correspondingly imposes “limitation”, we have the
doctrine of “direct and immediate effect” of the operation of the
impugned law on the freedom of trade and commerce in Article
301 as enunciated in Atiabari Tea Co.
Article 301 is, therefore, not only an authorisation to enact laws

for the protection and encouragement of trade and commerce
amongst the States but by its own force creates an area of trade
free from interference by the State and, therefore, Article 301
per se constitutes limitation on the power of the State. Article
301 is, however, subject to the other provisions of Articles 302,
303 and 304. It states that subject to other provisions of Part
XIII, trade, commerce and intercourse throughout India shall be
free.
Article 301 is binding upon the Union Legislature and the State
Legislatures, but Parliament can get rid of the limitation
imposed by Article 301 by enacting a law under Article 302.
Similarly, a law made by the State Legislature in compliance
with the conditions imposed by Article 304 shall not be hit by
Article 301. Article 301 thus provides for freedom of inter-
State as well as intra-State trade and commerce subject to other
provisions of Part XIII and correspondingly it imposes a
general limitation on the legislative powers, which limitation is
relaxed under the following circumstances:
(a) Limitation is relaxed in favour of Parliament under
Article 302, in which case Parliament can impose
restrictions in public interest. Although the fetter is
limited enabling Parliament to impose by law restrictions
on the freedom of trade in public interest under Article
302, nonetheless, it is clarified in clause (1) of Article
303 that notwithstanding anything contained in Article
302, Parliament is not authorised even in public interest,
in the making of any law, to give preference to one State
over another. However, the said clarification is subject to
one exception and that too only in favour of Parliament,
where discrimination or preference is admissible to
Parliament in making of laws in case of scarcity. This is
provided in clause (2) of Article 303.
(b) As regards the State Legislatures, apart from the
limitation imposed by Article 301, clause (1) of Article

303 imposes additional limitation, namely, that it must
not give preference or make discrimination between one
State or another in exercise of its powers relating to trade
and commerce under Entry 26 of List II or List III.
However, this limitation on the State Legislatures is
lifted in two cases, namely, it may impose on goods
imported from sister State(s) or Union Territories any tax
to which similar goods manufactured in its own State are
subjected but not so as to discriminate between the
imported goods and the goods manufactured in the State
[see clause (a) of Article 304]. In other words, clause (a)
of Article 304 authorises a State Legislature to impose a
non-discriminatory tax on goods imported from sister
State(s), even though it interferes with the freedom of
trade and commerce guaranteed by Article 301.
Secondly, the ban under Article 303(1) shall stand lifted
even if discriminatory restrictions are imposed by the
State Legislature provided they fulfil the following three
conditions, namely, that such restrictions shall be in
public interest; they shall be reasonable; and lastly, they
shall be subject to the procurement of prior sanction of
the President before introduction of the Bill.”

24. What has been held in the above noted judgments of Hon'ble
the Supreme Court is that Article 304 of the Constitution of India authorises
the State Legislature to levy tax on goods imported from other States or
Union Territories, but levy of such tax should not discriminate between the
goods so imported and similar goods manufactured or produced within the
State. Clause (a) of Article 304 of the Constitution of India though worded
in a positive language has a negative aspect. It is, in truth, a provision
prohibiting discrimination against the imported goods vis-a-vis the goods
manufactured or produced within the State. The basic object of the
provision is to check the States from creating what may be called “tax
barriers” or “fiscal barriers” with the object to ensure enjoyment of right
guaranteed under Article 301 of the Constitution of India to the freedom of

trade, commerce and intercourse throughout the territory of India. The
object is to emphasise upon oneness of the territory of India.

25. If the facts of the present case are considered in the light of the
enunciation of law consistently laid down by Hon'ble the Supreme Court,
the inescapable conclusion is that the action on the part of the respondents
in levying sales tax on sale of sugar imported from outside the State of
Punjab except levy sugar is clearly violative of Articles 301 and 304(a) of
the Constitution of India. In fact, upto 5.11.2007, there was no
discrimination as such in the levy of tax on the sugar manufactured in the
State of Punjab or imported from outside the State of Punjab as single entry
No. 49 existed in Schedule `A' to the VAT Act providing for tax free
goods. The levy of discriminatory tax came into force with the issuance of
impugned notifications, whereby entry 49 in Schedule `A' was substituted,
thereby providing for no tax on the sale of sugar manufactured in the State
of Punjab and entry 152 was added in Schedule `B' providing for tax on the
sale of sugar imported from outside the State of Punjab. From a plain
reading of the two notifications, it is clearly made out that discriminatory
tax was imposed on the imported sugar as against the sugar manufactured in
the State of Punjab, which cannot stand scrutiny in the light of the
provisions contained in Articles 301 and 304(a) of the Constitution of India.

26. Accordingly, we have no hesitation in striking down
notification No. S.O. 53/P.A. 8/2005/S.8/2007 dated 5.11.2007 (Annexure
P.2) adding entry 152 in Schedule `B' to the VAT Act, whereby tax is
sought to be levied on sale of sugar imported from outside the State of
Punjab. As a necessary consequence and to correct the mischief created
with the issuance of notification No. S. O. 52/P.A. 8/2005/S.8/2007 dated
5.11.2007 (Annexure P.1), we further hold that the words “manufactured in
the State of Punjab” used in entry 49 in Schedule `A' as substituted vide
notification (Annexure P.1) to be violative of Articles 301 and 304(a) of
the Constitution of India, as the same creates discrimination in the levy of
tax on the sale of sugar brought from outside the State as against
manufactured within the State of Punjab.

27. The writ petitions are disposed of in the manner indicated
above.
(Rajesh Bindal)
Judge
(Hemant Gupta)
Judge
13.8.2008